Outsourcing to India to Increase 50% Next Year

All the talk against foreign outsourcing this political season has not translated into action by U.S. executives, who plan to send 50 percent more work to India next year.

According to a study by Ernst & Young, while opposition to outsourcing has intensified in the presidential campaign and among union groups, the flow of work to India has remained constant, the Financial Times of London reported.

"The sentiment is very strong. None of our participants felt business on the ground had been affected," said Gopal Jain, a private equity investor involved with the Indo-American Chamber of Commerce in Mumbai, which jointly produced the report. The study backs up forecasts by the National Association of Software and Service Companies (Nasscom), the main group representing India’s booming technology industry.

The study said outsourcing in India, with its low-cost, English-speaking work force, next year will continue its trend of phenomenal revenue growth, which was 50 percent for the second straight year in the 12 months that ended March 31.

The fastest-growing sector of India’s technology industry is business-process work, such as filing U.S. tax returns or handling billing questions or telemarketing campaigns at call centers. According to the New York Times, 100,000 tax returns, both federal and state, were prepared by Indian citizens in Bombay and Bangalore this year.

Ernst & Young partner Ranjan Biswas, one of the report's authors, said employee retention is a key to India’s technology sector continuing its explosive growth. The monotonous nature of some of the work is blamed in part for increasing staff attrition and absenteeism.

"At any point in time these outsourcing units have around 10-12 percent of staff absent," Biswas said. That raises costs for companies who must keep extra employees on their payroll to fill in for absent workers or those who quit suddenly, he said.

Many U.S. business leaders said at a conference in Mumbai last week that they planned to add business-process centers close to their headquarters in the States to deflect criticism that they are sending U.S. jobs to low-cost foreign countries.

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